Background In sheep breeding, there are situations where relationships recorded at the farm among pedigrees such as parent-offspring, full-sibs or half-sibs need to be tested. A panel of 28 microsatellite (MST) markers was tested to provide accurate pedigree information and resolve the common problem of significant error in pedigree records in Merino sheep. Three different flocks of Australian Merino sheep were investigated. A private farm flock represents a flock with no record availability. Two other flocks were maintained under good managements of full keeping records and being selected for high and low parasite resistances. Results In the studied panel, eight MSTs provided an average of Polymorphic Information content (PIC) equal to 0.65 or more in order to be sufficient to make an accurate and successful DNA-based parentage analysis. The panel of twenty-eight MST loci was obviously sufficient for providing 100% accurate pedigree and genotyping data. DNA-based pedigree records were constructed and all significant pedigree record errors were eliminated. Conclusions These results were used for further study of population genetic parameters such as recombination and haplotyping which heavily based on pedigree information. Nevertheless MST based parentage testing is still available and affordable in most countries and for each farmer with reasonable cost in comparison with fast growing SNP based parentage technologies.